Construction to start on hotel conversion of Jarmulowsky Bank

Construction is slated to begin this week on a 12-story hotel at the site of the landmarked Jarmulowsky Bank building at 54 Canal Street, William Helm, vice president at DLJ Real Estate Capital Partners told The Real Deal. The 105-room hotel is slated to open in late 2014.

The former Beaux Arts-style bank has appeared on the Department of Building’s weekly list of stalled sites since December 2009. But since DLJ has owned the building, the project has not stalled, Helm said.

The Landmarks Preservation Commission signed off on the project in March, and the DOB issued permits this month for scaffold and sidewalk shed installation, roof protection, standpipe repairs and removal of a demising wall, or partition — suggesting that work is imminent. The last time more than two permits were issued in the same month was in 2008, records show.

DLJ bought the property in late 2011 for $36 million. The plan is to merge 54 Canal Street on the corner of Orchard Street with the site of a former electronics retail outlet at 60 Canal Street. The five-story building at 60 Canal, which the company purchased for $5.3 million last year, will “undergo extensive repositioning and will be incorporated into the fabric of the larger building,” Helm said.

The hotel is part of a recent wave of Lower East Side developments in the pipeline, further transforming the once low-income neighborhood into a more upscale destination. The Seward Park site, for example, will accommodate 1,000 new residences and up to 600,000 square feet of commercial space. There are also several other hotels under construction, such as the 26-story Hotel Indigo at 180 Orchard Street and the 16-story Allen Street Hotel at 138 Allen Street.

As an ode to the past, DLJ is arranging for reclaimed wood furniture to be manufactured and to eventually populate the hotel. A site for the manufacturing has not been finalized yet, Helm said today.

“We felt the neighborhood has some very historic underpinnings and we wanted to be mindful of the historic context,” Helm said.

The wood theme is no surprise given that the designer is restaurateur Taavo Somer, whose Williamsburg restaurant Isa is heavily woodsy – from the log-cabin structure to the indoor tree branches. The architect on the project, Ron Castellano, is best known for converting the former Jewish Daily Forward building at 173 East Broadway into condominiums.

DLJ, a former subsidiary of Credit Suisse, is a big investor in British private equity firm Alchemy Partners and owns several properties in Houston and McLean, Va., among others. In New York, they also own buildings at 3 Essex and 6 Essex streets in Chinatown, where the company is considering residential development, Helm said.

At 54 Canal Street, the developer plans to take full advantage of the 60,318 square feet of usable floor space, Helm said, including replacing fire escapes with balconies.

Russian philanthropist Sender Jarmulowsky founded the bank in 1873, but it failed about five years after the building was constructed in 1912. Equity Management purchased it for $25 million in 2005.